AUDIT ANALYTICS AUDIT

ESSAY 3: EVOLUTION OF AUDITING
AUTOMATING THE AUDIT
Organizations historically accustomed to manual audit procedures may
benefit from pursuing the future audit in an incremental manner. Such an
approach would basically result in conducting a pilot study to ascertain
the potential benefits of audit automation. Because resistance to change is
a universal phenomenon, gradual and careful advancement will likely be
a more tractable approach. Moving forward, this might ultimately result
in greater subsequent support for expansion of automated audit practices
and programs and could significantly improve the chances of success in
eventually reaching the future audit.
Lanza (1998) argues that low cost solutions for achieving an initial
automated audit experience include introductory CAATS that facilitate
data extraction, sorting, and analysis procedures. These programs require
little training, have no file size limitations, provide detailed audit logs for
use as work paper documentation, and allow for the creation of
auditor-specified reports that may be applied to current and future data
sets. These tools should be initially used to replace manual audit activities
because these are areas where the most substantial benefits might be
accrued. For example, the programs could be configured to address tasks
such as footing ledgers, choosing statistical samples, generating
confirmations, and detecting suspicious transactions. In addition, such
tools are capable of testing 100 percent of the records included in a file;
this is a marked improvement over the sampling techniques historically
found in the traditional manual audit. Through these programs, auditors
are able to obtain a better understanding of business operations as well as
enhanced levels of expertise and professional skepticism.
In terms of disadvantages, tools in this category do not operate on a truly
continuous basis. Specifically, they are batch process programs activated
periodically according to the audit plan. As such, although they certainly
offer the functionality to improve audit quality, it may eventually be
desirable to consider other methods that more closely align with the
future audit.
In addition to the preceding software considerations, training issues
should be addressed during the process of automating the audit function.
For example, Curtis and Payne (2008) argue that although CAATS are
capable of improving the efficiency and effectiveness of auditing
functions, such tools tend to be underutilized. Accordingly, properly
constructed and executed training programs may facilitate more
complete adoption and usage of CAATS by practitioners (Janvrin et al.
2008). Adequate training will be an essential component of any audit
automation initiative in order to optimize the likelihood that auditing
staff will take full advantage of the benefits that automated tools can
provide.
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